A commitment device is:
A. a way to deal with time inconsistency.
B. an arrangement entered into by an individual with the aim of helping fulfill a plan for future behavior that would otherwise be difficult.
C. something that helps people conquer their vices.
D. All of these are true.
Answer: D
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Indicate whether the statement is true or false
Market failure refers to a situation in which the market does not allocate resources efficiently
a. True b. False Indicate whether the statement is true or false
If the bank advertises 6 percent annual interest rate on a one-year certificate of deposit and you anticipate the rate of inflation to rise to 3 percent during the year, then the real rate of interest on the certificate of deposit is
A) 9 percent. B) 6 percent. C) 3 percent. D) 2 percent.
The non-discriminating pure monopolist must decrease price on all units of a product sold in order to sell more units. This explains why:
A. There are barriers to entry in pure monopoly B. A monopoly has a perfectly elastic demand curve C. Marginal revenue is less than average revenue D. Total revenues are greater than total costs at the profit maximizing level of output